There is no agreement as to the origin of the town's name. Originally named Hanson, it was changed to Farrell's Flat in 1870 when surveyed. Some say after James Farrell, a shepherd employed by Joseph Gilbert of Mount Bryan. Others insist that it was named after the Rev. Dean Farrell a well known preacher at that time. The 's' was dropped in 1940.
The town was connected by rail in 1870 and the Hanson Hotel opened in 1871. The town grew slowly. There were several accidents, in and around Farrell Flat during the 1870s as can be seen from the article below which is taken from the Chronicle of 22 April 1876. These kind of accidents were very common throughout Australia.
In 1884 it had a population of still only 148, living in 26 houses. It's postmaster was AT Clayer and the hotel's publican was WP Stoneham. Andrew Przibilla was farming and later joined by other Przibilla members. Ten years later AS Clayer was postmaster, JB Burt publican and James C Murphy schoolmaster.
At the turn of the century when the population had grown to 228 in 34 houses, the Hanson Hotel was run by Mrs MA Errington. In 1912 the town's population was considered big enough to warrant the building of an Institute and a Catholic Church.